Islandsbanki hf · OMXICE:ISB
Islandsbanki hf — Q2 2013 Earnings Presentation
30 slides from Islandsbanki hf's earnings presentation, Aug 28, 2013
Slide 1: 2Q13 Financial Results
2Q13 Financial Results 28 August 2013 1
Slide 2: Table of Contents
Table of Contents I. Overview II. Income Statement 2Q13 III. IV IV. Assets & Restructuring Liabilities Liquidity & Capitalisation Liabilities, 2
Slide 3: Overview
2Q13 OVERVIEW 3
Slide 4: A leading bank in Iceland
A leading bank in Iceland Serving over 200,000 customers, Íslandsbanki has market share of 31% in retail and 37% in corporate 1. SYNERGIES COMING THROUGH 2. COSTS PROGRAMS ARE DELIVERING RESULTS Synergies from mergers with Byr, Cost‐income ratio was 41.1% in 2Q13 compared to Kreditkort and Framt
Slide 5: Awarded 'Best bank in Iceland'
Awarded ‘Best Best bank in Iceland’ Iceland Euromoney annually appoints the best banks around the world with their Awards for Excellence With a clear vision and well defined operational objectives, Íslandsbanki has delivered excellent results Euromoney reviews several factors in the Bank’s opera
Slide 6: Overview: Key figures & ratios
Overview Key figures & ratios 1H13 2Q13 2Q12 ROE (after tax), % 14.8% 17.4% 12.2% ROE from regular operations (after tax), % 7.6% 9.0% 7.2% Net interest margin (of total assets), % 3.5% 3.4% 3.8% Profitability Cost to income ratio, ratio % %* 45 9% 45.9% 41 1% 41.1% 50 7% 50.7% Profit after tax, ISK
Slide 7: Income Statement
INCOME STATEMENT ~yY islandsbanki ey 1 PD
Slide 8: Income statement
Income statement Half year and quarter comparison ISK m 1H13 1H12 2Q13 2Q12 FY12 Net interest income 14,518 16,595 7,045 7,585 32,940 Net valuation changes on loans and receivables 7,868 2,068 4,751 3,612 6,486 Provision for latent impairment (18) (270) 106 (149) (776) Net interest income after net
Slide 9: Earnings from regular operations
Earnings from regular operations Reasonable profitability on a very large capital base ISK m 1H13 1H12 2Q13 2Q12 FY12 Reported after tax profit 11,209 11,624 6,623 6,018 23,418 Net valuation changes on loans and receivables (7,869) (2,068) (4,751) (3,612) (6,486) Impairment of goodwill 0 0 0 0 425 P
Slide 10: Net fee and commission income up 15% YoY
Net fee and commission income up 15% YoY Focus on long‐term stable cash flows, core operations continue to generate majority of total income TOTAL OPERATING INCOME NET INTEREST INCOME ISKm ISKm ‐ 7.1% + 17.9% 16,709 15 805 15,805 7,585 7,785 8,560 7,473 7,045 13,405 12,648 2Q12 3Q12 4Q12 1Q13 2Q13 1
Slide 11: Income mix is changing
Income mix is changing NII decreasing in line with amortization of discount following the acquisition of Glitnir loan book NET OPERATING INCOME SPLIT NII decreasing in line with expectations as deep By income type, % 16,709 discount following the acquisition of Glitnir loan book 15,805 13,405 is b
Slide 12: Results from cost projects coming through
Results from cost projects coming through Reduction in administrative expenses due to synergy effects and lower restructuring cost ADMINISTRATIVE EXPENSES COST / INCOME RATIO RATIO* ISK m % ‐ 9.6% ‐ 4.4% 7,185 6 797 6,797 50 7% 50.7% 50 6% 50.6% 51 8% 51.8% 43.0% 41.1% 6,549 6,501 5,767 2Q12 3Q12 4Q
Slide 13: Taxation has increased considerably
Taxation has increased considerably Tax & levies paid to Government institutions and the Depositors’ and Investors’ Guarantee Fund (TIF) ISK m 1H13 1H12 2Q13 2Q12 FY12 Income tax* 3,795 2,998 2,347 1,546 6,253 ** Bank tax 132 407 65 200 858 *** Financial activities tax 391 310 214 147 579 FME and Th
Slide 14: Good return despite growing equity base
Good return despite growing equity base Íslandsbanki’s equity has more than doubled since establishment in 2008 or 125% PROFIT AFTER TAX RETURN ON EQUITY TOTAL EQUITY ISKm % ISKm 7,197 155,537 , 6,623 + 15% 19.7% 152,101 6,018 18.6% 17.4% 147 660 147,660 4,596 4,585 13.3% 12.2% 140 045 140,045 135,4
Slide 15: Assets & Restructuring
2Q13 ASSETS & RESTRUCTURING 15
Slide 16: Assets
Assets Consolidated – 30 June 2013 Bonds and debt instruments ISK m 30.06.13 31.03.13 31.12.12 Mainly G5 government bonds in the Bank’s liquidity portfolio No exposure to GIPSIs Cash and balances with CB 98,042 65,822 85,500 Derivatives 229 119 127 Shares and equity instruments Bonds and debt in
Slide 17: Good sector diversification of loan portfolio
Good sector diversification of loan portfolio FX loans to customers with ISK revenue decreasing substantially LOANS TO CUSTOMERS ‐ CONSOLIDATED LTV DISTRIBUTION OF MORTGAGES TO INDIVIDUALS By sector sector, as of 30 30.06.2013 06 2013 ISKbn as of 30.06.2013 ISKbn, 30 06 2013 – average 80%* Other sec
Slide 18: Improving credit quality
Improving credit quality Both cross default and facility based credit quality measures are improving LPA METRIC AND PAST DUE LOANS Loan Portfolio Analysis (LPA) measurement Percentage of the loan portfolio The LPA ratio continues to decrease but at a slower rate Measures the progress of restruct
Slide 19: Loan portfolio performance
Loan portfolio performance Carrying amount reflects expected recovery of loans LOAN PORTFOLIO ANALYSIS (LPA*) LOANS IN RESTRUCTURING** TRANSFERRED TO WORKOUT Excluding fully performing loans to By status of restructuring By level of completion credit institutions 11.1% (31.03.2013: 11.9%) 2.6% (31.0
Slide 20: Liabilities, Liquidity & Capitalisation
2Q13 LIABILITIES, LIQUIDITY & CAPITALISATION 20
Slide 21: Liabilities
Liabilities Consolidated 30 June 2013 Deposits p ISK m 30.06.13 31.03.13 31.12.12 With a deposit ratio of 86%, Íslandsbanki has been largely funded by deposits since establishment. Derivatives and short positions 11,082 12,154 18,435 Less sticky deposits from financial institutions tend to fluct
Slide 22: Deposits remain a stable source of funding
Deposits remain a stable source of funding Normal fluctuations in deposit base DEPOSIT DEVELOPMENT AND DEPOSIT RATIO DEPOSITS FROM CUSTOMERS T l amount, parent company Total Customer term deposits as a percentage of total customer deposits, ISKbn and %, parent company 86% 86% 507 84% 84% 82% 473 477
Slide 23: Structurally sound balance sheet
Structurally sound balance sheet Solid funding base where deposits are the largest source of funding BALANCE SHEET COMPOSITION 30.06.2013, % Prudent asset and liability management 100% Other Other Short‐ The Bank has short term 90% Deposits from CIs & CBs Short‐ Cash & balances term assets that
Slide 24: Diversification of funding continues
Diversification of funding continues Íslandsbanki the first bank to list commercial paper and covered bonds on NASDAQ OMX Iceland since 2008 COVERED BONDS PERFORMING WELL IN AFTERMARKET ISK 25bn bond programme in place Spread on top of HFF bonds (Government guaranteed) Íslandsbanki plans to issue
Slide 25: Sound management of liquidity
Sound management of liquidity Liquid assets of ISK 183bn exceed internal and external requirements LIQUIDITY BACK‐UP* / DEPOSIT COVERAGE RATIO FME LIQUIDITY RATIOS 30 06 2013 parent company, ISK bn 30.06.2013, b 35% 35% 30% Asset type ISK FX Total 25% 20% 15% 17% Cash and balances with CB 90 1 91 10
Slide 26: Imbalances strictly monitored
Imbalances strictly monitored The currency imbalance stable between quarters IMBALANCES ISK bn, 30.06.2013 The adjustment of previous reports for FX/ISK loans, i.e. loans with a non‐ISK contractual currency to customers with ISK income, is no longer separately reported Decrease in CPI imbalance
Slide 27: Sound capital position
Sound capital position Capital ratios steadily increasing CAPITAL RATIOS and RWA RWA* Capital C it l ratios ti continue ti t rise to i on the th back b k off retained t i d earnings i Development 26.2% 27.4% and decreasing RWA 25.5% 24.3% 23.5% Drop in RWA mainly due to a reduction in the loan p
Slide 28: 5 key messages
5 key messages 2Q2013 interim financial results 1. NFC in 2Q13 is up 15% YoY while NII decreasing in line with expectations as discount, following the acquisition of Glitnir loan book, is being amortized 2. Significant results in cost cutting, cost‐income ratio down to 41.1% in 2Q13 from 53.7% in 2Q
Slide 29: Disclaimer
Disclaimer Important information All information contained in this presentation should be regarded as The forward‐lookingg statements made represent p Íslandsbanki’s preliminary and based on company data available at the time of the current expectations, plans or forecasts of its future results and
Slide 30: Thank you
Thank you y 30